ACT
See section 78. A lease may provide for termination because of the proposed demolition of the building containing the premises, but the lease cannot be terminated because of proposed demolition unless the landlord has:
- provided the tenant with sufficient details of the proposed demolition to indicate a genuine proposal to demolish the building within a reasonable time after the lease is to be terminated; and
- given the prescribed period of notice (at least 3 months if term is up to 1 year, and at least 6 months in any other case).
The landlord must pay reasonable compensation to the tenant if the lease is terminated because of the proposed demolition before the end of the term, whether or not the landlord goes ahead with the demolition.
NSW
See section 35. If a lease provides for termination on the grounds of proposed demolition of the building or any part of the building, the lease cannot be terminated, unless the landlord has:
- provided the tenant with sufficient details of the proposed demolition to indicate a genuine proposal to demolish the building, within a reasonably practicable time after termination;
- the lease cannot be terminated by the landlord unless the proposed demolition cannot be carried out practicably without vacant possession; and
- provided at least 6 months written notice of termination.
If such notice is given to the tenant, the tenant may terminate the lease by giving the landlord 7 days written notice within 6 months before the termination date given by the landlord. If the lease is for 12 months or less, the notice period is shortened from 6 months to 3 months.
If the proposed demolition does not occur within a reasonable time after the termination date, the landlord may be liable to pay compensation to the tenant for damages.
If the tenant was required under the lease to fit out the shop, the landlord is liable to pay compensation to the tenant (whether or not the proposed demolition is carried out).
"Demolition" includes repair, renovation and reconstruction.
A recent case that considered section 35 of the Retail Leases Act 1994, including what details are sufficient to indicate a genuine proposal is Wynne Avenue Property Pty Ltd v MJHQ Pty Ltd [2019] NSWCATAP 41.
NT
See section 49. "Demolition" is defined as substantial repair, renovation or reconstruction of the building that cannot be carried out practicably without vacant possession of the shop.
If a retail shop lease provides for the termination of a lease on the grounds of the proposed demolition of the building of which the retail shop forms part, the following applies:
- the lease cannot be terminated until the landlord has provided the tenant with details of the proposed demolition sufficient to indicate a genuine proposal to demolish the building within a reasonably practicable time after the termination;
- the lease cannot be terminated by the landlord without at least 6 months written notice; and
- if the landlord serves the notice of termination, the tenant may terminate the lease giving 7 days written notice at any time within 6 months of the termination date notified by the landlord.
If a lease is for 12 months or less, the period of 6 months referred to above is shortened to 3 months.
Unless the landlord can establish at the time of notice that there was a genuine proposal to demolish the premises, the landlord is liable to pay the tenant reasonable compensation for damage suffered as a consequence of the early termination if:
- a retail shop lease is terminated on the grounds of the proposed demolition of the building of which the retail shop forms part; and
- the demolition of the building is not carried out within a reasonably practicable time after the termination date notified.
If a retail shop lease is terminated on the grounds of proposed demolition, the landlord is liable to pay the tenant compensation for the fit-out if the tenant is required under the lease to fit out the retail shop regardless of whether the demolition of the building is carried out or not.
QLD
See sections 46H-46K.
The Act implies these provisions into leases which include a right to terminate the lease for demolition (as noted in section 46H).
These provisions (sections 46I46K) limit the landlord’s right to terminate the lease for demolition by requiring a genuine proposal to demolish the building with sufficient details to be provided to the tenant. At least 6 months' notice must be given and the tenant may elect for an earlier termination. The Act provides for reasonable compensation to be paid to the tenant for its fit-out, and where the demolition does not proceed, for any loss suffered by the tenant. However the compensation rights for loss and damage if the demolition is not carried out do not apply if the landlord can prove that as at the date of the landlord's notice, the landlord had a genuine proposal to demolish the building within a reasonable time after the termination date.
Section 43AD confirms that the landlord is not liable to pay compensation under section 43(1)(f) to the extent the tenant is otherwise entitled to payment of reasonable compensation under section 46K (demolition).
SA
See sections 3 and 39. Demolition of a building of which a retail shop forms part includes a substantial repair, renovation or reconstruction of the building which cannot be carried out practicably without vacant possession of the premises.
The landlord is only entitled to terminate a lease on the grounds of a proposed demolition of the building of which the retail shop forms part if the lease contains a provision to that effect.
If termination on the grounds of demolition is provided for in the lease, the lease is taken to include the following provisions:
- the lease cannot be terminated on the grounds of demolition unless and until the landlord has provided the tenant with details of the proposed demolition sufficient to indicate a genuine proposal to demolish that building within a reasonably practicable time after the lease is to be terminated;
- the lease cannot be terminated by the landlord without at least 6 months' written notice of the termination;
- if a notice of termination is given to the tenant, the tenant may terminate the lease by giving the landlord not less than 7 days' written notice of termination at any time within 6 months before the termination date notified by the landlord.
If the lease is for a term of 12 months or less, the 6 month periods are shortened to 3 months.
If a retail shop lease is terminated on the grounds of demolition and demolition of the building is not carried out within a reasonably practicable time after the termination date, the landlord is liable to pay the tenant reasonable compensation or damage suffered by the tenant as a consequence of the early termination of the lease, unless the landlord establishes that at the time of notice of termination was given by the landlord there was a genuine proposal to demolish the premises within that time.
TAS
See section 24. For a demolition clause to be invoked, a landlord must provide to the tenant firm proposals for the demolition affecting the tenancy involved. The landlord must give the tenant at least 6 months written notice of the termination of the lease. The tenant may then terminate on 1 month’s written notice which can be given to the landlord at any time within 6 months before the termination date specified by the landlord.
VIC
See section 56. A retail premises lease that provides for termination of the lease on the ground of proposed demolition of the building in which the retail premises are located is taken to provide the following:
- The landlord cannot terminate the lease on that ground unless the landlord has:
- provided the tenant with details of the proposed demolition that are sufficient to indicate a genuine proposal to demolish the building within a reasonably practicable time after the lease is to be terminated; and
- given the tenant at least 6 months' written notice of the termination date. (section 56(2)).
- If the landlord gives the tenant a notice of termination in accordance with section 56(2), the tenant may terminate the lease before the termination date by giving the landlord not less than 7 days' written notice (section 56(3)).
- If the lease is terminated by the landlord in accordance with section 56(2), or by the tenant in accordance with section 56(3) , the landlord is liable to pay the tenant reasonable compensation:
- if the demolition of the building is not carried out, or not carried out within a reasonably practicable time after the termination date, for damage suffered by the tenant as a consequence of the early termination of the lease; and
- whether or not the demolition of the building is carried out, for the fit out of the retail premises to the extent that the fit out was not provided by the landlord (section 56(4)).
- However, the landlord is not liable to pay compensation for the damage mentioned in section 56(4)(a) if the landlord establishes that when the notice was given there was a genuine proposal to demolish the premises within a reasonably practicable time after the termination date.
- The amount of the compensation is the amount that is:
- agreed between the landlord and the tenant; or
- if there is no agreement, determined under Part 10 of the Act (Dispute Resolution).
For the purposes of the section, "demolition" of the building in which retail premises are located includes any substantial repair, renovation or reconstruction of the building that cannot practicably be carried out without vacant possession of the premises.
WA
There is no provision in the WA Act specifically addressing termination of a retail shop lease to allow a demolition.
Sections 13 and 14A apply - see "Minimum 5 year term of lease" and "Relocation" for the detailed discussion concerning landlord's early termination rights in WA, as regulated by the Act.
Definitions and currency